The various governments do get their money in some funny ways. The Aberdeen American News reports that the gaming industry, aka gambling, is thriving in South Dakota.
Today, gamblers in South Dakota can go to 12 tribal casinos, 1,477 video lottery parlors, 629 lottery ticket retailers, 114 Deadwood gaming halls, two horse tracks and four simulcast horse- and dog-racing rooms.
In just the past 20 years, legal gambling in South Dakota has surged from a nearly nonexistent industry to one that raked in $1.742 billion of wagers in 2006 alone.
In fact, now a full 18% of revenue to the state comes from gambling.
Today, South Dakota's state government, through its various fees and taxes, relies on gambling to produce nearly 18 percent of its revenue, according to research by Richard McGowan, an associate professor of the Carroll School of Management at Boston College. In the United States, McGowan reports, only Nevada is more reliant on gambling to fill its state coffers.
“The state's probably more addicted to that revenue than any gambler is,” McGowan said last week. “And I think that's not exaggerating it. It's very difficult for them to replace that revenue, because it's pretty painless revenue from the state's point of view.”
What does Mr. McGowan mean by painless? Surely those lives ruined by the vice of gambling have
experienced pain. What he means, I suspect, is that it is painless for the legislature who can get loads of revenue without having to ask for a sacrifice on the part of the general population.
This is similar to the cigarette tax. Here is John McCain from the Republican debate earlier this week discussing the SCHIP program:
Another one [the president] should veto is the SCHIP program, which he should say, "Take the "C" out of, because now it's for everybody, like every other entitlement program." And, by the way, a dollar a pack increase for cigarettes? So we want to take care of children's health and we want everybody to smoke? I don't get it.
According to Congressman Tim Walberg, in order to fund the proposed massive increase in SCHIPS funding, which is funded by cigarette taxes, we need to add another 22 million smokers over the next ten years.
As we now know, since we South Dakotans raised our cigarette tax last year we have actually seen a decrease in revenue from that source. It might be that some people are going to reservations or across
state lines to purchase cigarettes. The state should have anticipated this. Or it may be that, hallelujah, people are stopping smoking because of the cost. This goes to the problem of funding programs with cigarette taxes: if the tax accomplishes what its advocates desire, the elimination of smoking, it will yield zero revenue. Good news for our health, but bad news for the appropriators in Pierre.
Either way, it seems unjust for the government to receive significant revenue through the taxation of vice. First, this targets a minority of the population to pay for the services we all receive. Yesterday I noted that the federal government is funded by the relatively rich minority. Cigarette taxes and gambling are a way to raise money from another unpopular minority, the poor, who disproportionately engage in both vices. In both cases the government targets a minority to pay for programs for the rest of us. Both cases are of dubious justice.
Finally, these sources of revenue make the state a partner in vice, an enabler so to speak. The state of South Dakota cannot afford to have people acting virtuously, meaning stopping smoking and gambling. If this occurs the state legislature might have to make some painful decisions. And who wants that.
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